Ryan Yacura wrote on 01/28/10 4:26 AM

Paul

You comments here couldn't be more true. I have had one buying experience with Zappos and it was exceptional. The return process is what made me most satisfied with the company. I feel that many companies overlook the importance of of the relationships that can potentially be created over time between employees and customers. This relationship has the potential to yield increased future revenues, elevated sales volume, and loyalty that would not be possible had the customer bond not been established. Zappos has certainly maintained this consideration throughout its existence.

I believe that the acquisition by Amazon will be a success. Amazon has great customer service as well. I have had far more purchasing experiences with Amazon and have never been disappointed. I believe both Amazon and Zappos will benefit from the near billion dollar purchase.

Dan Ziernicki wrote on 01/29/10 12:48 AM

Paul,

I have had several phenomenal experiences with Zappos. The company, as you mention throughout your post, stride on exceptional customer service and most importantly deliver.

I think we can discover several key factors from Tony Hsieh and his values he imposed upon Zappos as corporate culture. You mention of his trust with his co-workers, vendors, and customers. I believe trust and honor is a value that has faded recently in America. Jon Huntsman, a self made billionaire and philanthropist recently mentioned how people do not honor their word. He makes hundred million dollar deals with a simple handshake.

I believe Tony Hsieh really found a niche in which any entrepreneur could exploit in a specific industry: customer satisfaction/service. Large corporations cannot focus on the customer as much as small companies, who stride to do anything in order to keep their customers happy and returning. I believe this niche can be done with even higher satisfaction these days with online ordering, free shipping, and 24/7 customer support. As David Heinemeier Hansson said, "they are just selling fu**ing shoes!"

It is important to see Tony Hsieh values transpire post merger, as he assessed $40 million in stock to Zappos employees, intended on keeping all management, and does not intend to change any of the corporate values of Zappos.

Tamara Windt wrote on 01/30/10 6:34 AM

Paul

The Zappos service model is certainly an example of how making customer service intergral to a business' culture can reap gigantic rewards. The key to the WOW factor is really in the unexpected. When a business merely meets a customer's expectation, it has done nothing to retain that customer or ensure the customer won't go to a competitor next time. The true WOW is in the unannounced extras.

I frequent a family owned italian restaurant in my neighborhood (Manhattan Beach) called Mama D's. It is a cozy little place that has a line around the block each night. Why, you ask? The unexpected extras. Patrons waiting for a table are offered complimentary fresh garlic bread, fried calamari, pieces of homemade pizza or meatball, and occasionally a free glass of the house wine. Toys and games are piled high in front of the eatery for antsy children. After each meal, complimentary homemade (and gooey and warm) chocolate chip cookies are brought to each table. Children are offered otter pops and choose little toys from a treasure chest. Did I mention that the food is pretty good to boot?

The point is that all those little extras add up to big impressions on the customers. People come back week after week. They bring friends and families. They spread word of mouth. I venture to guess that Mama D's will have continued success with such a secure and loyal customer base.

In today's homogeneous business environment, one thing businesses can truly do to separate themselves from the pack is to wow the customer. I think it's a great philosophy and one I hope more businesses follow in step with the likes of Zappos, Mama D's, and other businesses who truly value service.

Melissa Stirling wrote on 02/02/10 1:47 AM

Hi Paul,

After reading your article and others about Zappos, I've come to understand and appreciate their business model. First, they buy up all of the shoes that no other store can sell, cheap and sell them at a decent price. Second, they clearly stress customer service, which is the core of their existence. Customer services reps(CSRs) as well as other employees go through a rigorous two-week training in customer service. They do not read off of scripts, and are trained to give the customer what they desire. I looked at Zappos' financials and something struck me. They have gross margins of ~34%. However their operating margin is close to ~2%. This indicates that they invest heavily in sales, administration and overhead. They must employ a lot of CSRs to work with customers, and invest a lot in shipping and maintaining a large inventory. Zappos sacrifices margin to maintain customer satisfaction.

I do have a personal experience with Zappos however. A few years ago, I was driving out to Las Vegas, and I needed a cheap pair of walking shoes as I forgot my pair at home. I happened to stop into Zappos storefront in Henderson, NV (on the way to the strip). I was absolutely horrified by the selection of shoes. They were some of the ugliest, unstylish shoes that I've ever seen. As hard as I tried to find a decent pair that I could wear out, it was impossible. I ended up picking up some sneakers at a local Target. I came to realize that Zappos is a great option for someone with absolutely no sense of style, and that is only concerned with having a set of sneakers at the lowest possible price. According to inquisitor.com, Zappos recently laid off about 8% of their work force. One would think that in this economy people would want cheaper shoes while sacrificing style, but this doesn't seem to be the case.

Jillian Jaccard wrote on 02/02/10 2:43 AM

I haven't had personal experience with Zappos, but from your article it sounds like I should! I've always avoided online shopping because I'm nervous about ordering the right size, but this return policy is quite enticing.

The customer trust aspect to Hsieh's business model is key to customer loyalty. By extending trust to the customer, the customer will trust the company in return. This friendly relationship encourages customers to behave with integrity while dealing with this return policy. Although a few rotten customers will take advantage of the system, the money the company loses because of them is very insignificant when compared to the amount of money the company makes in return for being so trusting of its customers.

Kelly Lui wrote on 02/09/10 10:22 PM

What stands out about Zappos, as this article clearly points out, is that Zappos isn't just an online shoe retailer but a company that offers "wow" and a little bit of happiness to its customers. It's absolutely true that Zappos is successful because they go above and beyond customers' expectations. Like Jillian, I especially like the "trust" aspect of their culture because Zappos is proof that have a company culture of trusting co-workers, vendors, and customers can work well for a business.

Travis Falstad wrote on 02/09/10 11:09 PM

I saw Tony Hsieh speak about a year and a half ago. At the time I worked at a large retailer and we could not (at the time) figure out why Zappos was destroying us in terms of sales. We had a large CS team, enthusiastic fans, multiple distribution centers, and a strong brand.

During the speech, I was interested to hear that they encourage support reps to stay on the phone with any given customer as long as they want and help them shop. The industry typically frowns on that in an effort to keep support costs down. Good for Zappos!

Most striking to me was Tony's sincerity when several of us from the audience lined up after his speech to introduce ourselves. He was near tears! It was very evident that he truly believed in the culture and was proud of what he had helped build with Zappos. It struck me on the way back to the office how important it is for the company culture to really be felt by senior management. If it is not, employees tend to discover that and become jaded.

After the event, we reviewed our support statistics and it was pretty mind-boggling. We had many customers who were unhappy with shipping charges, double billing of credit cards (a payment gateway issue), and a myriad of other experiences that could turn a customer against us. Some of these issues were just policies that made sense financially and were in line with the industry but where Zappos stands out is that they just ignored those standards. We made changes to our policies and made a greater effort to allow returns for any reason. Sales increased, customer support calls were more positive, and it helped our business.

Mark Schellenbach wrote on 02/23/10 7:43 PM

Paul,

As a former employee of the mega shoe retailer Nordstrom, I understand the importance of fit, style, price, and customer service. Naturally, Nordstrom prides itself in its customer responsiveness and excellent customer service. As a two time customer service “all star” it makes a great deal of sense to me that attentiveness to customer needs is fundamental. I found that most of my biggest sales came from return customers – those customers who were “wowed” by excellent customer service and who came back not just because of selection or price, but because of a great experience. Moving this same concept to the online space seems like an excellent approach. I’m impressed with Zappos’s model and it seems that their dedication to a hassle-free return policy and exceeding expectations has truly worked for them.